By Luzanne Wait, Short-term Insurance Adviser at PSG Jeffrey’s Bay.
With July being National Savings Month, it’s a time to reflect on where you could save money. Here are four ways you could save on your insurance premiums along with what these cuts could really mean for you.
Opting against value-added cover
Your monthly premium can be cheaper if you don’t add extras like car hire to your car insurance. With this cover, your insurer provides you with a car to use if you have an accident and your car is in for repairs. However, almost gone are the days of panel beaters supplying courtesy cars. So if you don’t have a way to get around without your vehicle for a few weeks, travel arrangements could be inconvenient and costly if you skimp on this cover.
Uber or Taxify may be useful, but consider that you might need to make alternate arrangements for longer than you think. Some European cars, for example, can take months to repair as replacement parts are imported into the country. Traditionally, car hire cover is for one month, so if you have an imported car, you may consider extending your cover for up to three months. Weigh this up against the costs of alternative transport before deciding to cut this from your insurance policy.
Rethinking the way you specify items
You may not need to specify jewellery, for example, under All Risk if you do not wear the item at all times. It may work out cheaper to include some items in your contents insurance, by factoring in their replacing cost as part of your overall contents cover.
A good example of an item like this could be a tablet – you might have one you only use at home, so it doesn’t need to be covered when you are out and about. If, however, the item/s you have in mind are particularly valuable and you are unsure if they should be specified, check with your adviser before including them in your general contents cover.
Underinsuring vs. overinsuring
Contents insurance is where we generally try to save. Remember though, if you have underinsured your contents, a claim may be repudiated or will only pay out proportionately. For example, if your contents value is close to R1 million and you have only insured for R250 000, your insurer may only pay out 25% of the claim.
On the flip side, if you overinsure, your premiums will be unnecessarily high. You must get an accurate idea of what it would cost to replace everything in your home if you were to have a fire or flood, keeping in mind how the rand might affect the replacement value of imported household items and fittings.
Adjust and gather
If you are looking for practical ways to save safely, consider adjusting your sum insured value on your car insurance periodically. As cars devalue, you could effectively have your premiums reduced too if you keep your sum insured value up to date.
Remember as well that the more products you have on a policy, the cheaper the premiums are. It is much more cost-effective to have everything from your car to your contents covered by one insurer.